Yesterday, on Wednesday 8th March, the Government announced the Spring Budget, marking International Women's Day with £5million to support women getting back to work after a career break. I've just returned to working on my small business after maternity leave and wanted to know how people like me would be affected by the Budget.
The success of small business owners, sole traders and the self employed could be hugely affected by the latest Budget. Changes of significance for British businesses were announced, though eclipsed by general discontent and the news that this may be the Chancellor's last Budget before Brexit is made official with the triggering of Article 50. Read on for my summary of how entrepreneurs will be affected by the changes.
The economy and infrastructure: better, faster, stronger
The state of the economy is reportedly positive with forecasted growth of 2% this year and a record high of employment at 31.8 million people. This means the job market is slightly less competitive than it has been and small businesses will have to hunt that little bit harder for the right people to grow their companies. Economic growth is forecasted to dip in 2018 then get back to 2% by 2021.
A boost to business could come from the National Productivity Investment Fund (NPIF) through its targets to improve travel. These include almost £700million for roads and public transport locally and £220 million for national roads. £200 million will be spent on full-fibre broadband networks across the UK to ensure faster and more reliable internet connections locally and £16 million will be invested nationally to trial 5G technology.
Better communication and transport infrastructure made possible by 5G, the NPIF and Cross Rail will increase productivity and efficiency for many businesses.
Business policy: protecting the consumer
The government is taking interest in protecting consumers by investigating unexpected charges related to free trials and subscriptions. Businesses using these hooks should make the most of this time to ensure that their approach is fair and transparent.
The government is also cracking down on terms and conditions and will be introducing new fines for misleading and mistreating consumers. For the majority of businesses this is only a good thing - increased vigilance and customer protection will lead to greater confidence when buying goods and services, hopefully leading to a boost for businesses doing the right thing.
Funding
New ventures in cutting edge fields such as robotics and artificial intelligence, medical manufacturing and electric transport will have a helping hand in starting up when the Industrial Strategy Challenge Fund launches. The fund will invest £270 million in research and innovation through universities and businesses.
Taxes - a squeeze for small business?
The big headline for business owners and individuals is the increase in personal tax paid. Class 2 NICs will be abolished. Class 4 NICs will rise to 10% in April 2018 and to 11% in April 2019. Almost 5 million self-employed people with profits over £16,250 w pay more as a result of the 22% NIC rise. Small businesses using the tax-free dividend allowance to pay their founders will be hit in April 2018 by the reduction in allowance from £5,000 to £2,000.
A massive change for companies will be the requirement of digital financial records submitted quarterly under Making Tax Digital (MTD). For small businesses and landlords accustomed to yearly submissions this is a big leap. Non VAT registered companies (any business with turnover under £82,000) have until April 2019 to register for MTD, though it may be worthwhile to do it earlier.
Local authorities will have £300 million of discretionary relief to help businesses most affected by the business rates relief revaluation meaning those affect will pay no more than £600 extra this year. Next tax year it is unclear what will happen to these companies.
How are you managing the impact of the budget on your business? Tweet #Budget2017 to join the conversation and show MPs that small businesses have voices too!